Chaman Lal Setia Exports Limited — Q4 FY25 earnings call

Call held 29 May 2025

Management summary

Chamanlal Setia reported a revenue of INR 1,500 crores for FY25, achieving 11-12% volume growth despite challenges from high ocean freight and stable-to-declining rice prices for most of the year. The company successfully mitigated inventory losses and is now benefiting from reduced freight costs and rising rice prices. With new capacity additions in Karnal and an upcoming Gandhidham plant, the company targets INR 2,000 crores revenue for FY26, focusing on strategic market entry and domestic brand building.

Highlights

  • Revenue of INR 1,500 crores for FY25, demonstrating excellent growth.

  • Volume growth for FY25 was 11-12% YoY.

  • Ocean freight rates have considerably come down from their peak, reducing a significant cost pressure.

  • Two new units in Karnal are operational at 60-70% efficiency, contributing INR 140 crores to revenue, with a third unit starting soon.

  • Rice prices have started to go up by 10-12% since March 2025, indicating potential for higher future margins.

  • Appointed a Maharani brand distributor in Australia, expanding international reach.

Concerns

  • Q4 FY25 revenue was slightly lower at INR 36 crore compared to INR 38 crore in Q4 FY24.

  • Transportation costs doubled in the last year, impacting profitability and margins.

  • Gross margins have decreased from 31% five years ago to 22% currently, though EBITDA margin remained relatively stable around 10%.

  • Company sometimes compromises on margins (INR 1-2 per kg or even a loss) for new customer acquisition and market entry.

Key financials

  1. Revenue ₹1,500 Cr
  2. Volume Growth 11.5%
  3. Stock Value ₹433 Cr
  4. Profitability per kg ₹10
  5. Gross Margin 22%
  6. EBITDA Margin 10%
  7. Branded Sales Share 14.5%

What they filed

Q1 FY27: revenue up 12.7%, net profit up 45.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue369 395 368 307 273 −26%431 +9%428 +16%346 +13%
EBITDA36 40 33 29 24 −33%51 +28%52 +58%44 +52%
Net profit27 29 25 22 19 −30%36 +24%38 +52%32 +45%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

medium confidence
  • Capex Capex disclosed
    • 3 new units in Karnal ₹1.5 Cr
    • New unit in Gandhidham
    • Increasing packing capacity
    Look, recently we put up 3 units. What should I say about CapEx? The work that is done in INR 1 crores, INR 1.5 crores, nothing bigger than that. Same way, we put up a new unit in Gandhidham. Go any day for inauguration only. There is nothing to do about it. I mean, we are increasing the packing capacity, not the paddy to rice capacity.

Guidance & targets

Revenue

  • Total Revenue Revenue · FY26 · High confidence INR 2,000 crores
    This year we expect at least a revenue of INR 2,000 crores with the new plants coming in. And of course, if you look at the past history of our company, the corresponding profits also should come.

    — Ankit Setia

Profitability

  • Overall Profitability Profitability · FY26 · Medium confidence Very good handsome profit
    Okay, so in this year, we can expect a very good handsome profit also? ... Yeah, should be.

    — Rajeev Setia

Margin

  • Profitability per kilogram Margin · Ongoing · Medium confidence INR 10 per kilogram
    So generally, we work on a margin of INR 10 per kilogram. This I'm talking from the past records. You can check yourself. So, this is the margin we work on, on an average.

    — Ankit Setia

  • Higher Profitability Margin · Next quarter · High confidence Higher profitability
    But next quarter, the same buyers and same revenue will lead higher profitability. So that is the model we follow.

    — Ankit Setia

Capacity

  • Karnal Plants Utilization Capacity · Within 1-2 months · High confidence 100% efficiency for all 3 plants

    From 60-70% for 2 plants today

    Yeah, they are running on an efficiency of 60%. There are some issues with electricity. We are trying to solve those. So, the moment everything is solved, I think in the next one or two months, it will be at their full level then.

    — Ankit Setia

  • Gandhidham Plant Capacity Capacity · Upcoming year · High confidence Double capacity
    In the next year, we feel Gandhidham revenue will go up because the new plant, I just have to go for the opening now, any day, it's ready. And another unit, which the old unit we are running, that will be brought down to new unit. So, we will have double capacity? Obviously, it will go up.

    — Rajeev Setia

Market Share

  • Branded Sales Share Market Share · Upcoming year · Medium confidence Increase a lot

    From 14-15% today

    Branded sale is around 14% to 15%. The rest is private label. In this particular year, the domestic sale is higher by INR 100 crore. And it will come in that; the share will increase a lot.

    — Rajeev Setia

What to watch in Q1 FY26

Capacity Utilization of New Karnal Plants

Next 1-2 months (by Q1 FY26 end)
Current 60-70% for 2 plants, 3rd plant starting in ~1 month
Target All 3 plants running at 100% efficiency

Why it matters

Full utilization of new capacity is key to achieving the FY26 revenue target of INR 2,000 crores and improving operational leverage.

two units have started working at an efficiency of 60% to 70%... the third one would start after about one month... I think in the next one or two months, it will be at their full level then.

Risks & concerns

  • High ocean freight costs

    high

    Ocean freight costs doubled in the past year due to geopolitical issues, significantly impacting profitability, though they have now reduced.

    Management acknowledged

  • Declining/stable rice prices

    medium

    Rice prices opened 15-20% lower this year and remained stable or declined for much of the period, affecting margins, but have started to increase since March.

    Management acknowledged

  • Margin compression due to market entry strategy

    medium

    Company sometimes compromises on margins (even working at breakeven or loss) to acquire new customers and expand revenue, with the expectation of higher margins later.

    Management acknowledged

  • GST compliance for pan-India distribution

    low

    Expanding domestic brand distribution across India requires registering in multiple states due to GST laws, posing an operational hurdle.

    Management acknowledged

Q&A highlights

6 direct
Q4 Revenue and Volume Growth Partial
YoY, it is 11% increase in volume. ... Q4, I have not taken out. I am looking at the year only.

Management provided full-year volume growth but was unable to provide specific Q4 volume or revenue figures, indicating a potential lack of granular data or a desire to avoid highlighting a weaker Q4.

Asked by Siddhant Bhandari

Impact of Freight Rates on Profitability Direct
what happened is the transportation cost has doubled in last one year. So that has impacted the profitability. ... The ocean freight, which was last year in September, October, $1,800 for Sokhna, Egypt. It is $500, $450 now in April '25.

Clearly identifies a key factor for margin pressure in the past year, but also signals a positive reversal with current freight rates significantly lower, implying future margin recovery.

Asked by Aniket C.

Strategy for Premium Products/Brands Direct
model of our working is mostly to pack private label. And of course, we are doing our own brand also and we are trying to expand it. ... in terms of expanding our revenue by 10%, we worked on some low margins also in that 10%.

Clarifies the company's primary business model (private label) and explains that recent revenue growth involved sacrificing some margins for market entry and customer acquisition, which is a key trade-off for investors to understand.

Asked by Kewal Shah

Capacity Utilization and New Plants Direct
two units have started working at an efficiency of 60% to 70%. ... Third one would start after about one month. ... in the next one or two months, it will be at their full level then.

Provides concrete details on the operational status and ramp-up timeline of new capacity, which is crucial for assessing future volume and revenue growth potential.

Asked by Rajesh Mangal

FY26 Revenue Target and Growth Drivers Direct
This year we expect at least a revenue of INR 2,000 crores with the new plants coming in. ... the target is to do INR 2,000 crores and we are confident we are going to achieve it.

Sets a clear, ambitious revenue target for the next fiscal year, linking it directly to the new infrastructure and market expansion efforts.

Asked by Siddhant Bhandari

Gross Margin vs. EBITDA Margin Discrepancy Partial
gross margins have decreased from 31% to 22% over the last five years. But our EBITDA margin has been fairly stable, sir. So why is that? ... To get a better sale, sometimes you have to compromise on the margins. Some big buyers come to you. They give limited profitability.

Highlights a significant shift in the company's margin profile over time and management's explanation points to a strategic choice of prioritizing volume and large customer relationships over higher gross margins, which could impact long-term profitability.

Asked by Madhur Rathi

New Market Opportunity in Japan Direct
one month back, there were people -- there was a delegation from Japan who visited our Gurgaon office. And about 10 days back, they wanted to visit our Karnal unit also. So, something is cooking up.

Reveals a new, potentially significant market opportunity for specialized rice varieties (low amylose/sticky rice) and the company's capability to meet this demand, indicating future growth avenues.

Asked by Hitesh Randhawa

Domestic Brand Strategy and Online Sales Direct
nothing substantial has happened so far. We are concentrating on online sales. We are with the Blinkit and Amazon and so many and the sales is gradually going up. And we have right now earmarked NCR only.

Provides an update on the domestic brand strategy, indicating a cautious, phased approach starting with online sales in a specific region rather than a broad, immediate distribution push, which helps manage investor expectations.

Asked by Praveen Sharma

2 min read 7 chapters

Detailed narrative

FY25 Performance and Revenue Growth Drivers

Chamanlal Setia achieved a revenue of INR 1,500 crores in FY25, marking an 11-12% volume growth year-on-year. This growth was primarily driven by the operationalization of two out of three new units in Karnal, which contributed an additional INR 140 crores to the revenue. The company's strategy of expanding its infrastructure and customer base, even at lower initial margins, supported this top-line expansion.

Impact of Freight Costs and Rice Prices on Profitability

The company's profitability in FY25 was significantly impacted by external factors. Ocean freight costs doubled due to geopolitical issues, though they have now reduced substantially (e.g., Sokhna, Egypt freight dropped from $1,800 to $450). Additionally, rice prices opened 15-20% lower this year and remained stable or declined for much of the period. These factors led to margin pressure, with gross margins decreasing from 31% five years ago to 22% currently, although EBITDA margins remained relatively stable around 10%.

Strategic Approach to Margins and Customer Acquisition

Management clarified its strategy of sometimes compromising on margins to acquire new customers and penetrate new markets. This involves working at lower profitability (e.g., INR 1-2 per kilogram) or even at a loss for initial deals, with the expectation of increasing margins once customer relationships are established. This approach is seen as necessary for expanding revenue and market share, particularly with large buyers who offer continuity.

Capacity Expansion and Future Outlook

The company has recently added three new units in Karnal, with two currently operating at 60-70% efficiency and the third expected to be fully operational within a month. The new Gandhidham plant is also ready for inauguration and is projected to double capacity in that region. These capacity additions are central to the company's target of achieving INR 2,000 crores in revenue for FY26.

Domestic Brand Building and Online Distribution

Chamanlal Setia is focusing on building its Maharani brand in the domestic market, starting with online sales through platforms like Blinkit and Amazon. The initial focus is on the NCR region, with sales gradually increasing. The strategy is to establish brand recognition through online channels before expanding to broader distribution networks and advertising. A new distributor for Maharani was also appointed in Australia.

New Product Development and Market Opportunities

The company is exploring new product categories, such as 'quick cooking rice,' which is currently in the lab stage and awaiting commercial production. Additionally, there's a new market opportunity emerging in Japan for low amylose/sticky rice, with a Japanese delegation having visited the company's facilities, indicating potential for future exports in this specialized segment.

Geopolitical Factors and Competitive Landscape

Management noted that India holds a competitive advantage over Pakistan in rice exports, with Pakistan's prices currently $100-150 higher. Long-term geopolitical factors, particularly regarding water sharing, could further impact Pakistan's agricultural output, potentially making it an importer of rice and benefiting Indian exporters. The company's business model, primarily serving ethnic customers, provides resilience against US tariff systems.

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